Key messages
- Primary producers can manage fluctuating farm income through year-end tax planning strategies such as Farm Management Deposits, prepayments and timing of income and expenditure.
- Opportunities exist to reduce taxable income by maximising deductions on eligible capital expenditure and immediate asset write-offs for items under $20,000.
- Strong record-keeping and early planning before 30 June are essential to ensure eligibility, optimise cash flow, and take full advantage of available tax concessions.
Primary production income can vary significantly from year to year due to seasonal conditions, commodity prices and the timing of sales. A targeted year-end review can help manage those fluctuations and ensure deductions are claimed in the right year.
As 30 June approaches, primary producers should review the timing of income, deductions and capital spending. With the right planning, it may be possible to smooth taxable income, improve cash flow and claim available concessions. Key areas to consider include Farm Management Deposits, prepayments, certain capital expenditure such as water infrastructure, fodder storage, fencing and the immediate asset write-off for eligible assets under $20,000.
Farm Management Deposits (FMDs) can be a valuable income-smoothing tool for eligible primary producers. FMDs can be offset against eligible primary production income and are deductible in the year the deposit is made, and taxable income in the year they are withdrawn.
FMDs can be particularly useful where farm profits are unusually high and there is a need to defer part of that income. Key points include the $800,000 cap per individual, the general 12-month holding rule and the need to consider how any later withdrawal will affect taxable income and cash flow.
If you have off farm income, FMD cannot be claimed if this exceeds $100,000.
Prepaying eligible business expenses before year end may bring forward a deduction, depending on the type of taxpayer, the nature of the expense and the period covered. For primary producers, this may include items such as feed, fertiliser, chemicals or insurance.
Not every advance payment is immediately deductible, so proposed prepayments should be reviewed carefully. Certain agribusinesses allow the prepayment of a lump sum amount, with interest paid on the balance, without the requirement of locking in fixed commodities prior to 30 June.
Eligible capital expenditure on items such as water facilities, fodder storage and fencing can often be deducted in full in the year it is incurred. This may include items such as dams, tanks, bores, irrigation channels, pipes, pumps and certain capital improvements or repairs connected with conserving or conveying water.
If water infrastructure works are planned, timing matters. Producers should confirm that the expenditure has been incurred before year end and keep clear records showing the business use of the facility. A fodder storage asset includes a structural improvement, a repair of a capital nature, or an alteration, addition or extension, to an asset or structural improvement, that is a fodder storage asset.
Primary producers may be entitled to an immediate deduction for eligible capital expenditure on fencing assets. This can include posts, rails, wires, droppers, gates and fittings that form part of a fence.
Before claiming a deduction, it is important to distinguish between repairs, new fencing assets and any broader Landcare works. Accurate supplier descriptions and internal records will help support the correct tax treatment.
Eligible small businesses using the simplified depreciation rules may be able to claim an immediate deduction for the business portion of depreciating assets costing less than $20,000. The threshold applies on a per-asset basis, so more than one asset may qualify.
To access the deduction, the asset generally needs to be installed and ready for use by year end, and only the business-use portion can be claimed.
Making a personal concessional superannuation contribution before 30 June may be an effective way to reduce taxable income while building retirement savings. For 2025–26, personal deductible contributions count towards the general concessional contributions cap of $30,000, which also includes employer super and any salary sacrifice amounts. To claim a deduction, the contribution must be received by the super fund, and a valid Notice of Intent to claim a deduction must be lodged with the fund and acknowledged before the deduction is claimed in the tax return.
Just a reminder that from 1 July 2026, employers will need to pay super at the same time as salary and wages under the new Payday Super rules. In most cases, contributions must reach the employee’s super fund within 7 business days of payday.
As part of the government changes the ATO Small Business Clearing House (SBSCH) will close on 30 June and you will longer be able to use this as your clearing house.
Review your payroll software and processes to make sure they can handle super payments each pay run.
Check your cash flow planning, as super will move from quarterly payments to weekly, fortnightly or monthly depending on your pay cycle.
Confirm employee super details are current to help avoid payment delays or rejections.
Speak with your accountant, bookkeeper or payroll provider if you need help preparing.
Review expected farm income and decide whether income smoothing strategies such as Farm Management Deposits are appropriate.
Identify planned prepayments and confirm whether they will be deductible in the current year.
Review planned purchases of eligible depreciating assets under $20,000 and confirm they will be installed and ready for use before year end if an immediate deduction is intended.
Bring together invoices and contracts for water infrastructure, fodder storage and fencing projects.
Check whether capital works have been incurred before year end.
Separate repairs, improvements and new assets so each item is treated correctly for tax purposes.
Keep clear records showing the business purpose and use of each expenditure item.
Obtain tailored tax advice before implementing significant year-end transactions.
The right year-end strategy will depend on your business structure, expected income, cash flow and planned spending. If you are considering any of the strategies above, talk to your accountant and review your options well before 30 June so there is time to confirm eligibility and document the position properly.
Thank you to Bernadette McKenzie from Belmores Chartered Accountants for contributing this article.